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Seven golden investment trusts for income that you can't afford to overlook



You want the maximum income from an investment with the least risk to your capital. The investment has to be diversified, well managed and with a long and respectable history of delivering returns. Sounds simple, but which investments meet the mark?


Using a range of data and analysis, The Mail on Sunday has drawn up a list of seven ‘golden shares’ for income. They are all investment trusts, meaning they are companies in their own right that are quoted on the London Stock Exchange.












LONG VIEW: Euan Grant will draw income from his holdings during retirement

But to qualify for our golden list these trusts must meet several criteria. They need to have increased their dividends each year for at least the past ten.


They also need to have at least £150million of underlying assets, widely invested across a range of UK or global shares.


And the yield – the annual dividends they pay, when measured against the cost of buying the trust – must exceed 3.7 per cent. That is about a fifth more than the yield of the average company in the FTSE 100 index of leading firms.


Some trusts have higher yields than those on our list and others have even longer histories of paying a dividend that grows every year.
But our list brings together those out of 400 trusts that best exhibit a range of positive traits, including a likelihood that they will be able to continue to meet their dividend commitments.


As well as delivering a solid income, all the shares in our selection have increased their share price by at least 33 per cent in the past five years – and some by twice that much – while the Footsie has risen just six per cent. Investment trusts, many of which are decades old, are enjoying a renaissance as more financial advisers and brokers start recommending them to clients.


Their generally low costs and good performance are also helping to push them more on to the radar of private investors.




Because they are companies in their own right, they offer the added protections of an independent board of directors plus annual meetings and detailed financial reports.



Longstanding private investors tend to have been fans of trusts for many years.




Euan Grant, 57, has been buying shares in investment trusts since the late Eighties. Today he owns shares in more than ten including, from our list, Scottish American and Murray Income.


Much of Euan’s career has been spent working for intelligence services on cross-border crime and fraud, so he says he is comfortable analysing financial and other data.


Euan, who lives in North London, describes himself as an ‘income- oriented’ investor who will, as he moves into retirement, become more ‘income-reliant’. He currently reinvests the income that is generated by his holdings.


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‘But I’ve arranged my investments with the view that at some point, when I retire, I will draw the income as I need it,’ he says.





Euan makes regular payments into his trust holdings. In addition, he invests lump sums sporadically into large, dividend-paying companies such as BP and GlaxoSmithKline. He monitors his overall investment portfolio carefully, but rarely sells holdings. ‘I am not a speculator, but an investor,’ he says.


Like most private investors, Euan gathers information from a wide range of sources and has grown in confidence over time.
‘I was fairly ignorant when I began to invest,’ he says. ‘But I drew on what I read in newspapers and magazines and attended exhibitions. The financial press has always been of use to me and I still rely on it.’
Ban on secret commissions makes advice more impartial


New rules unveiled last Friday will ban major brokers from pocketing secret commissions paid by fund companies.


The change, announced by the Financial Conduct Authority, should mean that instead of promoting only those investments that pay commission, brokers will now promote a wider range of investments – on the proper basis that they are the best options for their customers.


The change follows years of campaigning by The Mail on Sunday. We have long argued that secret commissions, or ‘backhanders’, lead to biased recommendations, and make it difficult for investors to see if they are getting good value.


The FCA says: ‘There is a risk these payments could lead to bias in the market.’


New rules are being introduced, it says, ‘to ensure investors can make fully informed choices’. Hargreaves Lansdown, by far the biggest broker with 476,000 clients, has resisted the changes, but says it will now adjust its model. It makes most of its money from commissions.


Consequently, its lists of recommended funds automatically exclude dozens of top investments, including all of the trusts we identify above.
The commission ban takes effect fully from 2016, but many brokers will switch to a transparent system sooner. Some, such as Alliance Trust Savings and Charles Stanley Direct, already have fully ‘commission-free’ models.

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